COMPENSATION 101 CREATING & ADMINISTERING YOUR BASE PAY STRATEGY Consulting Inc.

OUR AGENDA 1.Identifying your total rewards goals 2.Establishing your competitive philosophy 3.Defining your compensation policies 4.Identifying career paths and job worth 5.Matching to the market 6.Assigning jobs to grades 7.Creating your salary structure 8.Transitioning to the new structure 9.Managing salary administration 10.Evaluating your salary program

TOTAL REWARDS GOALS  To support the organization’s mission, vision, values and culture –To be fair, equitable, well understood and in support of lasting trusting relationships  To build depth, strength and sustainability –To be competitive and supportive of career progression  To promote smart business practices –To be economically responsible to employees and the organization  To inspire excellence and motivate results –Reward and motivate measurable performance

TOTAL REWARDS COMPONENTS AttractRetainMotivate Base Salary Incentives (STIP) Ownership (LTIP) Health Benefits Retirement Benefits Paid Time Off Perquisites Training Career Growth Variety, Challenge, Autonomy Organization Reputation or Purpose Size or Location Work/Life Balance, Flexibility Culture, Team, Leaders ………….etc. 3 Minutes

COMPETITIVE PHILOSOPHY Competitive Position - How competitive do you want your “total compensation” program to be?  50 th percentile?  75 th percentile?  For all occupations?  For all levels?  Compared to what organizations in what marketplace? (industry, size, geography)

COMPENSATION POLICY How will base pay be managed?  Who decides the pay of a new employee?  Under what conditions does pay change?  Is progression based on seniority or performance?  What is the timing of progression adjustments?  What is the timing of scale adjustments?  Are scale adjustments guaranteed for everyone?  What is the timing of promotion adjustments?  Who is eligible for overtime?

COMPENSATION PHILOSOPHY How will base pay be managed? (cont’d)  Who is accountable for determining the distribution of compensation rewards?  How will consistency be managed?  What information will be communicated to managers?  What information will be communicated to employees?  What information will be kept confidential?

CAREER PATHS & JOB WORTH A1 A2 A3 P2 P1 A5 A4 M2 M1P3 P4 P5 P6 M5 M4 M3 A = Administrative P = Professional / Technical M = Managerial Skill Education Experience Mental Effort Problem Solving Thinking Horizon Responsibility Autonomy Authority Impact Working Conditions Physical Effort Sensory Attention Mental Stress

MATCHING TO THE MARKET 1.Select sources of data 2.Identify benchmark positions 3.Match positions using market descriptors  Close matches  Blended matches  Partial matches 4.Collect data based on competitive criteria  Size of organization  Location of organization  Industry  Percentile match

MATCHING TO THE MARKET

ASSIGNING JOBS TO GRADES GRADECAREER FAMILIES AdminTechnicalProfessionalManagement 1Receptionist 2 Tech Support 1 3 4Accountant 1Tech Support 2 5 Global Support Tech 1 6Payroll AdminGlobal Support Tech 2HR Generalist 1 7 QA Developer HR Generalist 2 Financial Syst. Anal. 8 Software Developer Global Support Tech 3 Manager, Acctg. Manager, HR Manager, QA

CREATING THE SALARY STRUCTURE

SALARY BANDS Development ZoneExperienced ZoneExpert Zone 80% Min 85% Mid 90% Max 95% Min 100% Mid 105% Max 110% Min 115% Mid 120% Max 4 $38,216$40,605$42,993$45,382$47,770$50,159$52,547$54,936$57,324 5 $42,800$45,475$48,150$50,825$53,500$56,175$58,850$61,525$64,200 6 $47,936$50,932$53,928$56,924$59,920$62,916$65,912$68,908$71,904 CREATING THE SALARY STRUCTURE Developing Skilled Expert

TRANSITIONING TO THE NEW STRUCTURE

1.Managers recommend placement 2.HR conducts a gap and costing analysis while ensuring consistency 3.Red-circling and green-circling is considered for outliers 4.Pro-rating is necessary if transitioning from anniversary date to annual date

MANAGING SALARY ADMIN Will progression be fluid or based on steps? Who is eligible to progress beyond the midpoint? How will promotions be handled? Where are new employees placed?

MANAGING SALARY ADMIN Annual budgeting Based on organization affordability Based on trends for region, occupation, industry Considering CPI Establish a structure adjustment budget Establish a progression merit budget Establish a promotion budget Implement together based on performance

EVALUATING YOUR SALARY PROGRAM GRADEMINTARGETMAXARTISTADMINTECH TOTAL AVE. COMPA RATIO 1$24,500$35,000$38,500 ADMIN 1 91% 2$32,495$40,619$48,743 ADMIN 2 95% 3$36,720$45,900$55,080 ARTIST 1ADMIN 3TECH 2 88% 84%103%91% 4$41,494$51,867$62,240 ARTIST 2ADMIN 4TECH 3 89% 94% 5$46,888$58,610$70,332 ARTIST 3ADMIN 5TECH 4 92% 85% 6$52,983$66,229$79,475 ARTIST 4ADMIN 6TECH 5 101% 64%97%90% 7$59,871$74,839$89,807 ARTIST 5ADMIN 7TECH 6 96% 87%100% TOTAL AVE. COMPA RATIO74%91%98% Compa-ratio Analysis

STRUCTURE DESIGN IS ALSO IMPACTED BY VARIABLE PAY How does your variable pay design intersect with your base pay design for individuals and teams based on: Market practices Job level Company performance Individual and team performance Compa-ratio ….…the saga continues